There will come a time when you are no longer able to oversee your wealth. Whether that occurs as a result of death or disability remains to be seen. But at that critical juncture, it will be imperative that you have created a trust that provides details about how your wealth will be distributed and loved ones will be provided for financially.
In essence, creating a trust with full force of law is an act of love that relieves others of the duty to make hard choices. If you are like the majority of Americans, drafting a trust seems so complicated and overwhelming you have delayed. With the help of an experienced estate-planning attorney, each step in the trust-building process can be simplified and give you peace of mind.
Identify Goals of the Trust
During an initial planning meeting, you will discuss how the trust can achieve your personal goals. The foundation of these goals will most likely come down to identifying the people in your life and how assets will be distributed. Consider these important questions.
- Who are the beneficiaries?
- Who are the contingent beneficiaries?
- Who is the “grantor,” person transferring the property into the trust?
- What are the assets being transferred?
- Who would you like to serve as trustee?
- How will the assets be managed?
Should you create a revocable or irrevocable trust?
An experienced attorney can help you unfold the questions within these questions. For instance, what are the attributes of a good trustee? What are the differences between an irrevocable and revocable trust? With those answers in hand, you will be able to better comprehend the type of trust that serves your best interests.
Consider the Type of Trust that Meets Your Goals
A trust is not a one-size-fits-all product. In fact, there are numerous types of trusts that serve vastly different interests. Consider this short list as an example.
Bypass Trust: Sometimes referred to as family or credit shelter trusts, these are designed to help married couples avoid tax liability by designating assets to family members at time of death. They bypass estate taxes in many cases.
Special Needs Trust: When a person cannot adequately manage their financial affairs, this type of trust can be created to avoid a shortfall of support from benefits such as social services.
Living Trust: This type allows your assets to flow through to heirs without the oversight or public scrutiny that comes with probate.